Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11494010JX , Donna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11487180LXPoesie Veneziane Loafers - Women Poesie Veneziane Loafers online on YOOX United Kingdom - 11484318RH , Cesare P. Sandals - Women Cesare P. Sandals online on YOOX United Kingdom - 11443998QL , Vans Black Mens Superman Loafers SneakersLa Corte Della Pelle By Franco Ballin Loafers - Women La Corte Della Pelle By Franco Ballin Loafers online on YOOX United Kingdom - 11479244NSOim By Silvana Lauri Ankle Boot - Women Oim By Silvana Lauri Ankle Boots online on YOOX United Kingdom - 11560805IQwomen Beverly Feldman Black Multi-color Sandals Guarantee quality and quantity , woman REPORT Sage Landry Sandals Order welcome , mens/womens Geox W DOMEZIA 1 Heels Queenslandmen's/women's Giorgio Brutini 250202 Oxfords Most practicalmen/women Vaneli Inez Heels Aesthetic appearancelilimill BARBIE - Sandals Colour: rockSimply Be WIDE FIT ABIGAIL - High heels Colour: black , Men/Women ALDO Aaleni Sneakers & Athletic ALDO Sales Italy , Tod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11397844XDNeil Barrett Sneakers - Men Neil Barrett Sneakers online on YOOX United Kingdom - 11522474RN , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11519174TKPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11457233GHLerre Boots - Women Lerre Boots online on YOOX United Kingdom - 11508765CH , Pinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11541671LG , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11554148IQStella Mccartney Sneakers - Women Stella Mccartney Sneakers online on YOOX United Kingdom - 11573671KRMiu Miu Sandals - Women Miu Miu Sandals online on YOOX United Kingdom - 44840874EB , Medium cost Corral Boots G1379Modern technology Aetrex Lynco SlideGlobe Agent Dominate your next session with the Globe Agent skate shoeTory Burch Tan Elina - Style No. 21128612 Sandalsadidas Black/Olive Green Yeezy Boost 350 V2 Sneakers , WOMENS Via Spiga Camel/Tan Latanya Wedges New product
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.